Why Do Rich Left-Wingers Support Class-Warfare Taxes?

Why do some people instinctively despise wealth and want to tear down those who are successful? This question has been percolating in my mind because I am in Monaco to speak to the IXth international conference of the Convention of Independent Financial Advisors.

This tiny principality is an amazingly prosperous place, easily the richest jurisdiction on the planet according to World Bank data. And it oozes glamor, with everything from the Grand Casino to the legacy of Princess Grace (who was breathtaking in Rear Window).

There is an incredibly high concentration of luxury cars in Monaco, and I can’t walk into my hotel without stumbling over a Rolls Royce or Ferrari. Not that this is a surprise. I’m staying at the Hermitage, a luxurious hotel where the cheap rooms cost more than $500 per night.

Thankfully, that doesn’t come out of my pocket since I’m a speaker. I did make the mistake, though, of getting a diet coke with my breakfast, not realizing that drinks weren’t included and that I would be responsible for the absurd extra charge of 7 euro (which is $10.40, so thank you, Ben Bernanke, for trashing the value of the dollar).

Anyhow, you get the picture. Let’s returns to the original question, dealing with perceptions of wealth. As I wander around Monaco, I don’t envy the wealth I see. I can imagine how nice it would be to have a lot of money, of course, but that doesn’t lead me to resent the rich people. Instead, I think about how they must have done something very productive to accumulate so much money.

Not everybody thinks this way. I was talking to a left-wing academic, who also is at the conference, and this person made a comment about all the “crooks” in Monaco. I asked for elaboration and this person asserted that the wealthy residents of Monaco were the beneficiaries of ill-gotten gains.

While I reject the blanket assertion, this person has a point. I’m sure any crowd of rich people includes some folks who got wealthy the wrong way. Maybe some of the people in Monaco were former government officials from other nations who figured out how to steal taxpayer funds. Maybe some of them benefited from special government favors such as exclusive licenses or protectionist barriers to monopolize a certain market and rip off consumers. And others may have been conventional crooks who obtained loot from things such as securities fraud.

As I pondered this issue, it got me thinking about the broader problem of left-wing hostility to wealth – a sentiment that you find even from statists who have a lot of money. Why do they feel this way?

I’m wondering whether part of the answer is that many rich leftists didn’t earn their money. Or, to be more precise, they got wealthy due to connections rather than achievement. And because of their personal experiences, they conclude that wealth in general isn’t really deserved. So why not subject rich people – including themselves – to high tax rates.

This is especially true for politicians. They tend to obtain money in ways that do not exactly fit the definition of entrepreneurship. Consider these examples:

o Barack Obama gets millions of dollars by cranking out a couple of books. Even if he wrote the books (many politicians let staffers do the work), he still must recognize that he didn’t really do anything but trade on his political status to pad his bank account. Moreover, his wife got big bucks representing Chicago hospitals, and it would require deliberate naiveté to believe her lucrative position had nothing to do with the couple’s political prominence.

o Bill Clinton’s perceptions of the free market were probably distorted by his participation in the Whitewater real estate project, which wound up being a bit of a scam. Also, Hillary Clinton raked in $100,000 as a young lawyer by trading cattle futures. Even assuming that money was legit, it would lead someone to think that wealth was a matter of luck.

I’m not trying to pick on prominent Democrats. Plenty of Republicans also cash in on their political connections. But GOPers generally don’t push for higher taxes on the “rich,” and the purpose of this post is to speculate on why rich leftists support class-warfare policies.

But let’s set aside personal stories and look at how left-wing politicians must see the world of wealth. They routinely meet with well-heeled interest groups that are looking to line their pockets because of government favoritism. One day, they hear from the fat cats from Archer Daniels Midland, who come into their office lobbying for more ethanol subsidies. The next day, they may get a visit from the executives from GM and Chrysler, who jet into town looking for more handouts. And the day after that, somebody from Wall Street may drop by seeking a bailout.

After enough exposure to such sleazeballs, we should not be too surprised that leftist politicians begin to assume that all wealth is unearned. And if it is not earned, that means the rich person does not have a moral claim on the money. So why not tax it at high rates?

So long as I am playing armchair psychologist, I will make two additional points.

First, rich people who got their money from connections and/or luck may feel a certain level of resentment toward those who got rich by producing something of value. So even if they recognize that some wealth is earned, that does not mean they will support good policy.

Second, my theory certainly does not explain everything. There are plenty of rich left wingers, such as Bill Gates and Warren Buffett, who genuinely earned their money. I have no idea how to explain their political views:

Perhaps the only thing we can safely conclude is that some rich people think the wrong way. Gee, what a brilliant insight!

34 Responses

I think the best way to explain the Gates/Buffett mentality is to think of it as a PR stunt. Much of the public views a lowering of the marginal tax rate as a boon to the wealthy, so even if it were economically beneficial, any rich person advocating a lower marginal rate would be viewed as someone simply trying to enrich his/herself, regardless of whether or not the position has merits (it does). What do you give to the person who can afford anything and everything? Better PR.

It’s not because Buffett or Gates think incorrectly, nor is it a publicity stunt. Some people just have a sort of moral integrity that presses upon their conscious, which makes it quite difficult for them to bask daily in their oppulence, while millions of people worldwide quite literally starve to the brinks of death. In fact, all of us, despite our credit card bill statements, can make quite a difference in world suffering/poverty by sacrificing very little -say a morning latte or one of our happy hour pints once a week – so morally we all ought to be doing a little more. Of course this is all found in the teachings of Peter Singer, and I think he’s quite correct in saying that making these sort of sacrifices to prevent suffering is a duty NOT an act of charity.

And of course everybody should be doing what they can, but clearly what I can sacrifice is substantially less than what Buffett can and policies initiated to reflect this fact definitely should not be labelled class-warfare.

Or it’s possible that they prefer to live in a reasonably civil society rather than some banana republic where the wealthy take all and the rest disintegrate due to the lack of infrastructure and safety nets.

WHITEWATER a SCAM IS A BLATANT LIE–LIE
Four people borrowed $200,000 bought 210 acres of land, cut roads, and sold lots. Mcdougal had made his small fortune doing it.
1977–sold some till recession hit. Paid off loan.

Taxes–current rank in oecd nations
#2-Least Taxed–30% of GDP in fed-state-local
#2-Least Taxed corprations–1.5% GDP(6% in past)
# 4-Inequality—10% own 80% of our wealth And take 50% of income
80% own 12% and take 12% of income
It says End Of Empire ahead

Clinton left Bush Peace on Earth Good Will From Most Men
Bush left Obama Hell on Earth Two disastrous wars. Enmity of 1500 Million Muslims

Clinton left Bush a President most highly rated of any peacetime President in Asia, Africa, Europe.
Bush left Obama the most hated President in history
Bush left Obama an Housing Tsunami and Financial Volcano
Bush left Obama, in 2008, an 8500B Bail out commitment Yes! 8500 not just 700
Bush left Obama his Takeover of Fannie/Freddie, AIG, and first bailout of Chrysler
Bush increased maximum loan by Fannie/Freddie from $300,000 to $729,000
Bush increased FDIC maximum deposit coverage from $100,000 to $250,000
clarence swinney–political historian–lifeaholics of america burlington nc
author-Lifeaholic–Life story of Workaholic failure to Lifeaholic success
Best seller list in haw river nc population 200 and growing

(4 yrs to 8 yrs. So, use Average per year on some and Monthly average also.)

ONE SIMPLE QUESTION.

HOW COULD THE DEMOCRATIC LEADERSHIP ALLOW THE TRASHING OF CARTER AS A FAILED PRESIDENT??? DISGUSTING. CARTER WRITINGS AND SPEECHES WERE MARVELOUS. BRILLIANT. PROPHESY.

——————–JOBS————————————————-

Real Increase—Carter-13.0% in 4 years—Reagan-17.5% in 8 yrs

Carter 10,488,000 in 4—Reagan 15,935,000 in 8.

*Per month Carter averaged far more than Reagan
218,000 to 175,000.

Care to compare number of homes built per year. Don’t. Reagan killed S & L’s.
Care to compare GDP growth without massive spending + 80% (borrow) programs.
Carter-3.4%–Reagan 3.4% even with major government spending
Care to compare Increase in National Income and GDP to Debt Growth
Care to compare percent increase in Federal Revenues
Care to compare GDP Growth in “Real” dollars per year

Care to compare First THREE Years—

First figure is Carter

Real GDP—+3.2%– +1.3%= 59% less for RR
Industrial Production–+3.0%–+.01%= 97% less for RR
Rate Capacity Utilization 83.4% –75.9% = 9% less for Reagan
Plant-Equip. Expend. +14.6%–.8%= 95% less for Reagan
Housing Starts—1.76 Million—1.28 million = 27% less for Reagan
Domestic auto sales—8.48 million—6.25 million= 26% less for Reagan
Business Failures—8461—24,291= +189% more for Reagan
Civilian Unemployment—6.7%–7.5%= 13% more for Reagan
Number Unemployed—6.74 million—9.89 million=+47% more for Reagan
Real Disposable Income Growth–+1/9%–+1/3%= 32% less for Reagan
Prime Rate—10.96%–14.94%= +35% more for Reagan
Federal Budget Deficit—48.5 Billion—153.billion= +215% more for Reagan
Farm Income–+1.75%—5.7%= 326% less for Reagan

Comparison Above of 13 items from CBO Record 3-26-84

Care to compare number killed overseas
Care to compare percent Increase in Defense Spending
Care to compare number of LIES told
Care to compare numbers of departments with SCANDALS
Care to compare numbers of administration members who were investigated, went to prison, convicted or charged.
Care to compare respect by foreign nations
Care to check 1947 National Security Act that was instrumental in checking the expansion of communism.
Care to compare number of times president went to church.
Care to compare results of Community Reinvestment Act vs S&L Death Act
Care to compare how historians rank them without $$ spent by conservative think tanks
(In 1994 Reagan was ranked tenth from bottom– Conservatives have spent millions
re-inventing his average record).
Care to compare as DEREGULATOR? Airlines-Financial Institutions-Transportation
Care to compare with which created FEMA
Care to check who was President when FISA was passed into law?
Care to check who started Centcom—As-RDJTF-Rapid Deployment Task Force-
(Reagan changed name to Centcom) -U.S forces designated for possible employment to Middle East.
Carter produced the First Arab-Israeli Peace Treaty
Carter normalized trade with China
Carter led the Senate to obey our treaty and yield control of Panama Canal.
Carter killed the neutron bomb
Carter won Nato agreement to match Soviet missiles in Europe
Carter limited strategic nuclear arms with Salt II Treaty.
Carter paid UN dues in full, on time and without conditions.
Carter got third world majorities against Vietnam’s intervention on Cambodia.
Carter placed embargoes on Soviets for invasion of Afghanistan
The great anti-communist Reagan “lifted” them while Soviet “Evil Empire” was still in Afghanistan
Carter efforts were significant on—Human Rights impartiality, nuclear build down, energy sustainability, Middle East peace, non-interventionism .
Same President who said this—“The oil flow from the Persian Gulf is a vital interest to the United States and this country will employ any means necessary including military force to overcome an attempt by a hostile power to block that flow.”

When Carter left office it took 3.6 years of average income to purchase an average priced new home. After Reagan’s years it took 4.2 Years and now under Bush II 5.4 years.
This is an important figure. In Constant(inflation adjusted) dollars.

Historical analysis of years 1946 to 1981 then 1981 to 2009 reveal much on Rich Pals get richer and Middle Class(overwhelming number) stumbled. Major directional change or America and Middle Class. Few did exceedingly well. Rest staggered under burden of dormant income and wealth decline in real dollars.

When Conservatives hit on Carter as a “do nothing” administration they best not check the FACTS.

Conservatives re-invent and trash other presidents in an effort to promote Reagan.
Reagan was not by any means an above average President.
Blarney Baloney Deluxe. An actor acting in a role as President.
He was graded as a C president.
Historians use numbers not emotions.
500 in 1994 rated him tenth from bottom
In 1994 one of top two historical societies polled members and rated him 21% above average 79% below average. 18% of the 79% rated him “Disaster for America”

Reagan honored Nazi SS Troops. Carter Fought.

NO NUMBERS REVEAL AN ABOVE AVERAGE RECORD

If anyone has some present them I will use them. My challenge to Conservatives.

Carter’s Energy principles/plans- 1977

The first principle is that we can have an effective and comprehensive energy policy only if the government takes responsibility for it and if the people understand the seriousness of the challenge and are willing to make sacrifices.

The second principle is that healthy economic growth must continue. Only by saving energy can we maintain our standard of living and keep our people at work. An effective conservation program will create hundreds of thousands of new jobs.

The third principle is that we must protect the environment. Our energy problems have the same cause as our environmental problems — wasteful use of resources. Conservation helps us solve both at once.

The fourth principle is that we must reduce our vulnerability to potentially devastating embargoes. We can protect ourselves from uncertain supplies by reducing our demand for oil, making the most of our abundant resources such as coal, and developing a strategic petroleum reserve.

The fifth principle is that we must be fair. Our solutions must ask equal sacrifices from every region, every class of people, every interest group. Industry will have to do its part to conserve, just as the consumers will. The energy producers deserve fair treatment, but we will not let the oil companies profiteer.

The sixth principle, and the cornerstone of our policy, is to reduce the demand through conservation. Our emphasis on conservation is a clear difference between this plan and others which merely encouraged crash production efforts. Conservation is the quickest, cheapest, most practical source of energy. Conservation is the only way we can buy a barrel of oil for a few dollars. It costs about $13 to waste it.

The seventh principle is that prices should generally reflect the true replacement costs of energy. We are only cheating ourselves if we make energy artificially cheap and use more than we can really afford.

The eighth principle is that government policies must be predictable and certain. Both consumers and producers need policies they can count on so they can plan ahead. This is one reason I am working with the Congress to create a new Department of Energy, to replace more than 50 different agencies that now have some control over energy.

The ninth principle is that we must conserve the fuels that are scarcest and make the most of those that are more plentiful. We can’t continue to use oil and gas for 75 percent of our consumption when they make up seven percent of our domestic reserves. We need to shift to plentiful coal while taking care to protect the environment, and to apply stricter safety standards to nuclear energy.

The tenth principle is that we must start now to develop the new, unconventional sources of energy we will rely on in the next century.

These ten principles have guided the development of the policy I would describe to you and the Congress on Wednesday.

Our energy plan will also include a number of specific goals, to measure our progress toward a stable energy system.

These are the goals we set for 1985:

–Reduce the annual growth rate in our energy demand to less than two percent.

–Reduce gasoline consumption by ten percent below its current level.

–Cut in half the portion of United States oil which is imported, from a potential level of 16 million barrels to six million barrels a day.

–Establish a strategic petroleum reserve of one billion barrels, more than six months’ supply.

–Increase our coal production by about two thirds to more than 1 billion tons a year.

–Insulate 90 percent of American homes and all new buildings.

–Use solar energy in more than two and one-half million houses.

We will monitor our progress toward these goals year by year. Our plan will call for stricter conservation measures if we fall behind.

I cant tell you that these measures will be easy, nor will they be popular. But I think most of you realize that a policy which does not ask for changes or sacrifices would not be an effective policy.

Whether this plan truly makes a difference will be decided not here in Washington, but in every town and every factory, in every home an don every highway and every farm.

I believe this can be a positive challenge. There is something especially American in the kinds of changes we have to make. We have been proud, through our history of being efficient people.
HOW CAN DEMOCRATS IGNORE SUCH A GREAT MAN?

[…] The accurate theme is that bigwigs sometimes use the coercive power of government to obtain unearned wealth. And in some cases, that unearned wealth comes from corrupt deals with politicians from third-world […]

[…] The accurate theme is that bigwigs sometimes use the coercive power of government to obtain unearned wealth. And in some cases, that unearned wealth comes from corrupt deals with politicians from third-world […]

[…] The accurate theme is that bigwigs sometimes use the coercive power of government to obtain unearned wealth. And in some cases, that unearned wealth comes from corrupt deals with politicians from third-world […]

[…] any distinction, allow me to stipulate that there are some rich people who got money dishonestly. I addressed this issue in a post last year and I suspect that some politicians think rich people are sleazy crooks because the rich people […]

[…] any distinction, allow me to stipulate that there are some rich people who got money dishonestly. I addressed this issue in a post last year and I suspect that some politicians think rich people are sleazy crooks because the rich people […]

[…] any distinction, allow me to stipulate that there are some rich people who got money dishonestly. I addressed this issue in a post last year and I suspect that some politicians think rich people are sleazy crooks because the rich people […]

Great posts as usual Dan. Regarding “Why Do Rich Left-Wingers Support Class-Warfare Taxes?”, the political views of Gates, Buffett, and the like may stem in part from envy avoidance and rich guilt.

John Lennon confessed that guilt from his riches largely drove his left-wing political activism. “That radicalism was phony, really, because it was out of guilt. I’ve always felt guilty that I had money, so I had to give it away or lose it,” he told a Newsweek reporter.

In his seminal book Envy, Helmut Schoeck documents envy avoidance, from primitive tribesmen who take extraordinary measures to hide their wealth from fellow villagers for fear of the “evil eye” to professors who turn down positions at twice the normal pay for fear of being envied by the faculty.

Buffet and Gates may consciously or subconsciously be feeling, “Look how many social programs and tax increases I support, so please don’t hate be because of my wealth.”